Loans aren't the only means to a college education

Under a new bill finally passed by our dysfunctional Congress and approved by President Obama, the rates on new subsidized Stafford loans will drop from the 6.8 percent rate they reached July 1 when the House and the Senate failed to take action to keep the rate at 3.4 percent. That means undergraduates this fall can take out new Stafford Loans at 3.9 percent through 2015 academic year, graduate students will pay 5.4 percent and parents 6.4 percent, with those rates good for one year. Good news all around, according to congressional members, and I’m sure there was back-slapping and congratulations galore over martinis at the Old Ebbit Grill. The lending rates are better than 6.8 percent, yes indeed, but under the bill, the Stafford loans are tied to 10-year Treasury notes, and when they go up, so will student and parent loans. Congress did put limits on how much the rates increase. New Stafford loans can’t go higher than 8.25 percent for undergraduates, 9.5 percent for graduate students and 10.5 for parents.

REMEMBER WHEN PEOPLE SAVED FOR COLLEGE But we need to take a serious look at some alternatives to student loans, which leave students with debt they drag around for years like Marley’s chains. One alternative to loans, of course, is getting parents to start socking money away for their children’s college educations soon after the umbilical cord is cut. Yes, times are hard and putting food on the table can be enough to stretch many budgets, but there are plenty more families that don’t make saving up for college a priority, although there’s enough to spare to buy that daily Starbucks. Nevada has several programs to help parents save to pay for college, including automatic payroll deductions. To see the various plans, visit the Nevada State Treasurer’s website at https://nevadatreasurer.gov/collegesavings.htm. But San Francisco did Nevada one better. To encourage parents to save for college, the city of San Francisco began its Kindergarten to College initiative in 2010 by opening a college savings account for more than 1,000 kindergarteners in the city’s school district and providing seed money to the tune of a one-time $50 deposit in every account. Under San Francisco’s K2C program, the savings accounts are established in the students’ names. In addition to the initial one-time $50 deposit, the city also will match up to $100 deposited by the parents during the first year the account is open. Matching funds are available for parents who sign up for a minimum direct deposit and there are incentives for relatives and friends to make deposits as well. Money in the account can only be used for post-secondary education, including, tuition for college, community college or other kinds of training programs, plus books and other education-related expenses. If a child does not go to college or a qualified training program, all K2C funds contributed to the account are returned to the K2C program. Non-K2C money is returned to the student. San Francisco’s Kindergarten to College initiative has grown in the last three years to more than 8,000 accounts.

The problem with starting a similar program in Reno or Nevada would be our high rate of people moving in and out of the state.

OREGON WANTS TO PAY IT FORWARD Another innovative plan is in Oregon, where the state Senate unanimously passed a bill in July creating a committee to develop a pilot project called “Pay It Forward.” The program, which would cost an estimated $9 billion in start-up costs, would let students attend community colleges without paying tuition and fees in exchange for giving back 3 percent of their post-graduation annual salaries for the next 25 year. (The 3 percent is based on a four-year degree. A student's percent payback would be based on the number of years to graduation or certificate.) Yes, 25 years is an eternity to a 20-something, but so is not pursuing your dream to be a nurse or an architect and spending the rest of your life instead working at jobs you hate. Estimates are Oregon’s plan could prevent students from having to pay more than $1.1 trillion in debt, and the money paid back by the graduate students who went to school tuition, loan and debt-free would pay the tuition and fees for incoming students. Nevada has long ranked at or near the bottom of the 50 states when it comes to students who go on to enroll in college. Now funds are drying up for the GPA-based Millennium Scholarships, named after Nevada’s late pro-education Republican Gov. Kenny Guinn. Maybe it’s time for the Silver State to get a little more creative.